Bank of Ireland ‘disappointed’ by Davy rule breach
Other clients of broker express concern too
Bank of Ireland: “We are disappointed by Davy’s breach of its MifID obligations”. Photograph: iStock
Bank of Ireland said on Wednesday that it has sought clarification from Davy, a corporate broker to the lender, on how the firm will address failures that led to a €4.1 million Central Bank fine this week.
Other major clients, Permanent TSB and housebuilder Glenveagh Properties, have also expressed concern in statements issued in response to questions from The Irish Times.
However, a number of others, including Smurfit Kappa, Ryanair and Glanbia declined to comment when asked if the regulatory reprimand will lead to a review of their corporate broker relationships with the State’s largest stockbroking firm.
“We are disappointed by Davy’s breach of its MifID obligations and falling short of the standards expected,” a spokesman for Bank of Ireland said, referring to EU investment regulations. “We have been in contact with Davy to understand how the failures are being addressed. We have also sought assurances that the Central Bank of Ireland’s findings do not impact any aspect of Davy’s role as corporate broker to Bank of Ireland.”
A spokeswoman for Permanent TSB said that the Central Bank statement issued on Tuesday in relation to Davy “raises serious issues and we will carefully monitor the situation and how the firm responds to the Central Bank findings”.
A spokesman for Glenveagh Properties said that the Central Bank statement “is of concern” and that the housebuilder is “monitoring the situation but have no further comment to make at this time”.
The fine is in relation to a bond trade where a group of 16 of its staff, including top executives, sought to profit personally by taking the opposite side of the transaction with a client in 2014 – while failing to tell either the client or its own compliance officials.
The Central Bank found that Davy breached rules by failing to take all reasonable steps to identify whether a conflict of interest arose in relation to the trade.
It also concluded that the firm’s controls were not up to scratch, as the group of 16 easily sidestepped rules relating to personal account dealing and kept Davy’s compliance function in the dark.